The success of Estonia’s digital strategy

Life in the Digital Society

Estonia’s success as a digital society has caused increased global reputation and engendered significant positive feedback. But what are the features of the information strategy that provide the small 1.3 million-country with considerable recognition and a competitive advantage?

Today’s world does not allow establishing a business strategy without technology, even from a country perspective. Countries need to adapt to and embrace this rapidly changing and evolving environment where reduction of administrative burden or elimination of red tape become key issues that governments need to tackle.

In this context, former Soviet republic Estonia emerges as a leader in digital strategy and transformation. In times where millennials increasingly foster work-life balance, the country has proven to be able to facilitate the life of its citizens, for instance by enabling them to vote from home. Moreover, a so-called “E-ID” allows citizens to access the state portal, which functions like one-stop-shop enabling users to access services ranging from public health duties to automobile or university procedures. Further, everything is linked by software called X-Road, making information collection and exchange possible with a handful of clicks.

However, I-voting and E-ID are not the only features of “E-estonia” that underline its digital strategy. Electricity providers have taken a ubiquitous big data approach, using advanced smart meters that allow them to verify customer consumption on an hour-by-hour basis. Then, by logging into a user-friendly online platform, customers can in turn see their detailed metering results and adjust their usage accordingly. They can even tell how much of their electricity is coming from renewable sources, and decide about how much green energy they would like to use.

Consequently, one can consider life of Estonian citizens to be almost entirely integrated by technology. Although I believe that other countries may have implemented a strategic digital positioning in some fields – I would for instance think of the healthcare sector in Great Britain – no other country appears to be as fully digitalized as Estonia.

Another example is the country’s cyber security infrastructure. As trust and security prevail to be tremendously important in a digitalized world, Estonia has heavily invested in cyber security infrastructure and therefore put in place state-of-the-art framework for cyber protection. Even more, the country is home of the NATO Cooperative Cyber Defence Center of Excellence. And there is a plethora of other examples including healthcare, education or online government services that do only reinforce why Estonia’s information strategy has provided a competitive advantage.

Estonia’s information strategy has aimed to ensure a reduction of administrative burden, but also to increase work-life balance and living standards of its inhabitants. Both features are critical for the millennials generation, a generation that values flexibility, efficient procedures and leisure time more than ever. As a result, I would like to emphasize that reduction of red tape should be a part of every country’s strategy. In this vein, Information technology is a highly valuable solution and needs to be taken into account.

However, there is another reason why “E-estonia” has turned into such a successful strategy. In a world where powers like the US or Russia demonstrate their wealth and influence, other nations have to find their niches in order to become competitive. Especially for small countries like Estonia, it remains critical to thoroughly investigate how they can differentiate themselves. Therefore, by aiming to establish a strategy of a digitally driven and transparent society, the Baltic state has found a way to prosper and to thrive, proving that implementing a niche strategy can become an excellent solution not only for a company, but also for a country.

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2 responses to “The success of Estonia’s digital strategy”

Investing in digitalising government services can be beneficial both for the government and IT companies/start-ups who are willing to invest in this sector:

1) A McKinsey research showed that “capturing the full potential of government digitization could free up to $1 trillion annually in economic value worldwide, through improved cost and operational performance”. So it seems obvious that digitalization it is the public sector’s best interest not only because citizens expect now-a-days the government to be available online but also because of the huge savings this can result in. (I suggest to read this excellent McKinsey article to understand the topic in more depth and read about some more good case practices: http://www.mckinsey.com/insights/business_technology/public_sector_digitization_the_trillion_dollar_challenge)

2) “It is important that private-sector companies supporting public IT transformations” and this is not just important but with working with the government companies can tap into a sector that has massive room for improvement when we talk about digitalization. If we check Mary Meeker’s 2015 Internet report we can see that Government/Policy Making and Healthcare are the sectors least impacted by the internet so far. (Keep in mind that the report is about the US but still it gives a good perspective) This means that in this sector’s “AirBnB and Uber” didn’t arrive yet so it can be a good untaped market for new businesses (http://techcrunch.com/gallery/best-of-meeker/slide/4/)

But we can’t forget to mention that although government digitalization has still a long way to go, can result in massive saving and create new business opportunities these projects are six times more likely to experience cost overruns and 20% more likely to run over schedule than such projects in the private sector, a joint study by McKinsey and Oxford University shows.

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